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Japan Stays Aggressive on Stimulus

TOKYO — Japan’s central bank decided on Friday to hold steady on its aggressive monetary stimulus program and said the nation’s economy continued to recover moderately. Economists expect the bank to expand its asset-buying program next year to counter any ill effects of a scheduled sales tax increase.

Japan’s all-out monetary stance underscores how its policy trajectory is diverging from that of the United States, where the Federal Reserve said in the past week that it would start winding down its bond-buying program with growing confidence in the country’s economic growth.

But in Japan, officials at the central bank, the Bank of Japan, are determined not just to kick-start growth but to pull the country out of years of deflation, or falling prices. Haruhiko Kuroda, the bank’s governor, has committed to a goal of reaching 2 percent inflation in the next two years — a tall order for a country with a shrinking population where it has become the norm for prices, wages and profits to languish.

Japan could be helped in its quest for growth by the Fed’s move, with the long-anticipated announcement of a winding down further strengthening the dollar against the yen. That helps to buoy the prospects of Japanese exporters, which have already benefited from a weakening home currency. On Friday, the yen dipped to 104.44 against the dollar, its weakest level in five years.

Exporters have led a spectacular stock market rally this year. The Nikkei 225-share average closed at its highest level in six years on Friday, rising 0.1 percent to end at 15,870.42. In the past year, the Nikkei has jumped more than 60 percent.

“Japan’s economy is expected to continue a moderate recovery as a trend,” the central bank said in a statement.

Still, Prime Minister Shinzo Abe has warned that for Japan to stage a full recovery, corporations must share more of their wealth by raising wages and spending more on investment. Recent data have shown that companies remain cautious about putting their higher earnings back into the economy. Japan’s gross domestic product grew 0.3 percent in the third quarter from the previous three months, the government said earlier this month, revising down a preliminary reading of 0.5 percent.

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Mr. Abe has also promised to introduce pro-market reforms to raise Japan’s growth potential, part of a strategy known as Abenomics.

“We must stand together in our resolve to beat deflation,” Mr. Abe told a meeting of government officials, corporate executives and labor union members to discuss wages and labor issues.

To get money flowing again in the economy, Mr. Kuroda unleashed an aggressive program in April to buy government bonds and other assets, and committed to doubling the money supply in two years. On Friday, the bank’s policy board voted unanimously to maintain the rate of increase in its cash and deposits at 60 trillion yen to 70 trillion yen, or $574 billion to $670 billion, a year.

Many economists expect the bank to go further next year to counter any negative economic fallout from a planned increase in Japan’s sales tax in April, from 5 percent to 8 percent. The government has also expressed concerns that higher taxes could blunt consumer spending and economic growth, and it has introduced a ¥5.4 trillion public spending package as a cushion.

The bank should watch out for the expected surge in demand ahead of the tax raise, followed by an inevitable slump, Mr. Kuroda said at a news conference. “But fundamentally,” he added, “moderate recovery will continue.”

He also said he expected Japan’s consumer prices to rise at pace of more than 1 percent by the end of the year, from 0.9 percent in October. Much of that rise has been driven by the weaker yen, which is pushing up the price of energy and other imports.